Japan looking to work style reform to improve productivity and work–life balance

In September 2016 Japan’s Prime Minister Shinzo Abe held the first meeting of the Council for the Realization of Work Style Reform to address, among other labor issues, Japan’s reliance on long working hours.

Prime Minister Abe believes that the key to work style reform is to provide workers with the hope of a better future: “We must realize equal pay for equal work, and close the gap between regular and irregular employment, so that young people can have bright hopes for their futures. We must grow the middle class so that they increase their consumption and so that more people can have families. As a result, Japan’s birthrate will improve.”  

The council will consider what legislation and policies are necessary for work style reform, compile a concrete action plan, and submit the relevant legislation to the Diet—the Japanese National Assembly.

The initial focus for the council will be on nine areas of work style reform, including: improving the employment conditions of non-regular employees (e.g. equal pay for equal work); reducing long work hours (e.g. by introducing a regulatory limit on overtime work); creating an environment where it is easy for women and young people to work; promoting employment among the elderly; addressing the acceptance of foreign workers, and, as discussed in the second council meeting, held earlier this week, the acceptance of flexible work styles, such as tele-working and side jobs.  

Ronald L. Oaxaca has investigated the effect of overtime regulations on employment for IZA World of Labor. He notes that regulation of working hours and pay can increase the standard hourly wage of some workers and encourage work sharing that increases employment, particularly for women. However, Oaxaca warns that “[l]egal reduction in work time raises labor costs, which can lead to a reduction in overall employment. The empirical record offers no evidence of job creation through overtime regulation. In the end, such regulations may not only fail to increase job holding but may actually reduce employment.”

Alternatively, our author Michael Beckmann has addressed the practice of working-time autonomy (allowing workers to control their own hours). Managers often raise concerns that working-time autonomy might encourage workers to reduce their effort, whilst some worker representatives claim that it leads to harmful work strain; however, Beckmann reveals that the “empirical evidence suggests that such policies do not induce harmful overwork but boost firm productivity, on average, unless incorporated into a system of family-friendly workplace practices. And even in that case, firms benefit from lower turnover and wage costs.” However, he recommends that when combining working-time autonomy with performance targets, managers should set realistic goals and avoid target ratcheting or stretch goals.

Related articles
The effect of overtime regulations on employment, by Ronald L. Oaxaca
Working-time autonomy as a management practice, by Michael Beckmann
Equal pay legislation and the gender wage gap, by Solomon W. Polachek
Can government policies reverse undesirable declines in fertility?, by Elizabeth Brainerd
Late-life work and well-being, by Carol Graham